Up to a million Canadians would struggle to cope with a 1 per cent rise in interest rates with 700,000 at risk from even a 0.25 per cent rise

If Toronto were to follow Vancouver with the introduction of a tax on foreign buyers of homes, it would be “misguided” the city’s real estate body says.

Toronto Real Estate Board says that foreign buyers have been involved in an estimated 4.9 per cent of transactions handled by its members in the year to November 2016. Of those, 40 per cent were buying a primary residence with a further 25 per cent adding the property to the rental market.

TREB says that strong demand and higher prices is the result of low supply. Demand is growing from a cocktail of increasing population, low mortgage rates, low unemployment rates and rising incomes.

While governments have been focusing their policy solutions on allaying demand, what is needed are policies that focus on the lack of available homes for sale and for rent. The public, private, and not-for-profit sectors need to come together to focus on innovative solutions to the housing supply issue,” said TREB CEO John DiMichele.